A bit of portfolio rebalancing for my Jubak's Picks portfolio

01/14/2014 2:08 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

I’m going to take advantage of the early 2014 weakness in U.S. stocks to rebalance the Jubak’s Picks portfolio to reduce the cash position in that portfolio.

I’ll have the performance results for my Jubak’s Picks portfolio through the end of December (and with a quarter by quarter breakdown for 2013) posted within a week. (I’m currently deep into the September quarter.)

But while that’s still pending I’d like to announce a beginning of the year portfolio rebalancing.

I wasn’t able to reduce my cash position as much as I would have liked in 2013. (Nobody wants to carry 30% cash when the market is headed to a 32% gain for the year.) Back in January 2013 I made what was in retrospect a very bad decision not to increase the size of my positions in this portfolio across the board to soak up some cash. Market valuations were worryingly high, I worried, back in January.

Absent that kind of rebalancing, the only way to reduce cash positions in this portfolio is to add more positions. But the portfolio is at a size where adding a significant number of positions would push it toward an unmanageably large size.

So without a January 2013 rebalancing and without a decision to manage even more positions, I wound up stuck with too much cash in 2013.

The way I’ve rebalanced this portfolio in the past is to increase the size of each position by making an equal dollar amount purchase on an arbitrary date relatively close to the beginning of the new year. Last year a beginning position in each Jubak’s Picks stock was $12,000. This January, effective with the end of the day prices today January 14, I’ll be upping that initial position by $2,000 for each position to $14,000. In effect that means I’ll be buying $2,000 for each position in the portfolio at the January 14 closing price. Sells, when I make them, will reflect that larger position size.

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